ITALY: Protesting Rumor's Remedies

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As Italians basked in their first hot summer weather last week, they were in an "If this is Tuesday, it must be Tuscany" mood that had nothing to do with the country's annual swarm of tourists. In Tuscany, the Piedmont and Sicily, Italy's three giant labor federations called carefully orchestrated half-day work stoppages to protest government fiscal policy. Each day the protests occurred in a different region. In Turin, 25,000 auto workers poured into Piazza San Carlo for a noisy protest. Then in Florence, 40,000 mounted a parade. In Sicily, in turn, peasant farmers waved large banners that said it all succinctly: NO TO THE SUPER-DECREE!

The super-decree was actually a package of the most drastic anti-inflation measures any European government has attempted. Premier Mariano Rumor's government imposed them two weeks ago to control rampant inflation (currently 17% per year). The moves will soak up $4.8 billion and help redress Italy's massive balance-of-trade deficit, which has reached $1 billion per month.

Taxes, fees and rates all went up abruptly. Property taxes leaped as much as $80 per room. Public transport and electricity rates were increased, and the price of gasoline rose sharply to $1.81 a gallon. Added taxes were put on "luxury" goods, including imported beef as well as cameras and alcohol. The most unexpected and resented increase was the surtax on automobiles. Italy's 12 million automobile owners will now have to pay a one-time surtax ranging from $10 on a Honda to $50 on a family-size Fiat 124, to $400 on a Lamborghini and $575 on a Rolls-Royce. "We know well that we are asking heavy sacrifices of the Italians," Rumor told the public. Added Treasury Minister Emilio Colombo: "If there were not the courage for unpopular measures at this moment, we could expect consequences that would be even more serious."

Too New. But opponents of the stiff new levies complained that the indirect taxes soaked the poor. Communist Labor Leader Luciano Lama protested that "the measures are not equitably distributed and the utilization of funds so unjustly collected does not in any way assure investments and social services." Lama warned that the regional work stoppages, along with strikes in services, were not "bonfires of straw that would go out in a few minutes." Labor leaders, for the most part, are willing to wait until autumn to let the government decrees take corrective effect. But they are being pressed by militant workers who resent the taxes and want to fight them with a general strike.

Rumor's remedies are too new for soundings yet on their efficacy. But tight money (even state industries are happy to pay 24% interest) inside Italy has already bolstered the lira by forcing Italians to repatriate some of the estimated $16 billion they have sent out of the country for safekeeping in the past decade. International bankers at this point believe that the government's emergency measures are tough enough for Italy to squeak through its current economic crisis.

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